Greek FinMin activates system to cross-check bank deposits against declared income

Greece's finance ministry on Thursday announced the activation of a new automated electronic system that is able to cross-check bank account deposits against the income declared by tax-payers, enabling the ministry to trace discrepancies and any undeclared income in the space of just one week. The new system is expected to significantly strengthen the finance ministry's arsenal for fighting tax evasion.

Presenting the new system during a press conference, Finance Minister Euclid Tsakalotos described it as the "stick" that will signal to tax evaders that the ministry now has the means to locate them. It will initially be used to investigate some 1.27 million tax payers included in the various list of depositors the finance ministry has in its possession, with priority based on a specific set of risk analysis criteria. 

The "carrot" for the same tax payers will be the new laws for the voluntary disclosure of income, which envision much lower penalties for those that make use of it. Here, again, the ministry expects that the new system will act as an incentive and greatly increase revenues from voluntary disclosure.

According to ministry estimates, the additional revenues from the cross-checking system will help Greece achieve a 3.5 pct of GDP primary surplus target and allow the government to adopt stronger social welfare policies.

The new software was developed by a special finance ministry team and presented by Tsakalotos, Alternate Finance Minister Katerina Papanatsiou and the head of the Independent Authority for Public Revenues Giorgos Pitsilis on Thursday.

Raw data concerning primary movements

Previously, the mechanism for cross-checking the deposits in an individual's bank accounts against the income that he or she declared could take up to 18 months, with 10 months required to collect the bank details and income tax statements alone. Under the new system, the information will be collected in the space of minutes and the cross-checking can be completed within a week. In exceptional cases where there is a greater degree of complexity and difficulty, the process may take up to a few weeks, the speakers clarified.

The system's major advantage is its ability to track the raw data concerning the primary movements in tax payers' bank accounts and compare these with their declared income - a process that had previously been very time-consuming. It was clarified, however, that the system will only provide an "initial estimate" of tax evasion and that the final estimate will arise as the result of a full tax audit.

Tsakalotos praised the work of the finance ministry team involved and noted that the present government had been the one to give the go-ahead for the specific system, even though it had been technically possible before, accusing previous governments of lacking the necessary political will.

Papanatsiou said it was proof of the government's resolve to stamp out tax evasion and catch those responsible, while stressing that there was no danger that the cases linked to the various lists held by the finance ministry will become statute-barred.

Pitsilis, meanwhile, said that the authority had already started to make use of the new system, with 131 inspectors trained in its use on a pilot basis, while the training of certified inspectors in the new system has now begun.

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